The Investigative Reporting Workshop released a report on Thursday detailing how one of the first big chunks of money for clean energy under the stimulus package is actually being spent. Our findings (I was the lead reporter on the story) can be found here.
Most interestingly, we found that the program, which is designed to reimburse companies for 30 percent of the cost of building a renewable energy facility, has given out $1.05 billion since Sept. 1. Almost all of it (91 percent) has gone to 11 wind farms (a mix of solar, geothermal and biomass projects collected the rest).
The 11 wind farms are scattered throughout the United States, but the companies who own them and ultimately benefited from U.S. taxpayer funds are scattered across the globe. In fact, 84 percent of the total - $849 million – went to projects owned by foreign companies.
On one level, it’s very much an old-fashioned “How-Are-Your-Tax-Dollars-Being-Spent?” story. We looked at who owned the projects, what country they call home and who built the wind turbines that were installed (turbine manufacturing is where you find most of the long-term economic activity associated with building wind energy). We also looked at who lobbied Congress for renewable energy incentives the stimulus bill. We found a mixed crowd of international companies, including huge conglomerates like BP and Alstom—better known for their carbon and nuclear programs, all eager to come to America and take advantage of the package’s benefits for clean energy (hardly a secret).
We also examined how this money was disbursed with virtually no strings attached (there is no obligation for any of this $1.05 billion to be reinvested, though several of the companies have said they will).
But there is more than this one level to the story, and the deeper issues have serious implications for anyone interested in clean energy’s future in America. In a nutshell, the fact that European companies are lining up to collect stimulus money is indicative of something bigger: the American clean energy sector is not in great shape. There are only two major U.S.-owned manufacturers of wind turbines (GE Energy and Clipper Wind), and they produced less than half of the turbines installed last year. Even less this year.
The biggest developer of wind farms is still NextEra Energy Resources, a subsidiary of Florida Power & Light, but the Spanish firm Iberdrola is second. Foreign companies riddle the rest of the top ten. (Fascinating charts showing market share can be found on pages 14 and 15 of the American Wind Energy Association’s 2008 annual report.) Since the economic crisis of last fall, U.S. companies have pulled back their investment and foreign companies have charged ahead.
So, how did we get here?
It’s not a secret. Once upon a time, American innovators invented the modern turbine. After a brief moment of patriotic pride in the accomplishment, we mostly abandoned it until recently when we decided wind should be a bigger part of the renewable energy mix. Even in those brief periods when Americans did support wind, we loved other energy forms more (here’s a great chart illustrating federal incentives for various energy sources through 2003).
Numerous attempts to get wind going were made through the 1980s and 1990s, and numerous American wind companies stumbled and fell. Meanwhile, European countries were subsidizing their wind industries and pouring money into their technology development.
It is not a coincidence that the No. 1 supplier of wind turbines globally (and largest foreign supplier in the United States) is Denmark-based Vestas. Denmark set ambitious goals for their wind industry and backed them.
Other European countries did the same, and now Asia and China are following suit, pumping money into their industry and watching as they spring from nothing to major players. Indian companies have been selling turbines in the U.S. for several years now, and minutes before our report was released on Thursday, the first major deal to bring Chinese-built turbines to the U.S. was announced.
Does it matter that we have to rely on foreign companies to build our wind power?
Several people I spoke to about this story -– analysts and other journalists -– have made a comparison to the auto industry. One person asked me, “Is a Honda Odyssey manufactured in Lincoln, Alabama, a Japanese car?”
On the one hand, we live in a global economy where international borders are increasingly meaningless. Money knows no borders and so much of our economic system is based on international trade and manufacturing. And when it comes to many of the leaders in wind energy (Denmark, Spain, etc.), we don’t face the sort of geopolitical issues like we do with oil-rich countries like Saudi Arabia and Venezuela. Nobody worries about an addiction to Danish wind technology.
And in the midst of the worst recession in decades, a job is a job. Micheline Maynard’s new book argues that in many cases, it does not matter who owns the company, because it is the jobs we need.
An industry analyst I interviewed asked me why, if you’re talking about creating direct economic benefit—jobs and investment, here and now -– would you care if a turbine plant in Iowa is Spanish owned?
“The only thing that goes back to Spain is the corporate profits,” he said.
Well, the corporate profits and the fact that Americans are dependent on foreign technology, of course.
With the Senate beginning to debate a comprehensive climate and energy bill, President Obama has begun speaking out, very explicitly, on the need for the United States to assert its dominance in the clean energy sector -– i.e. to control the profits and the technology.
One week ago today, speaking at the Massachusetts Institute of Technology, Obama challenged the nation to be the clean energy leader:
“Countries on every corner of this Earth now recognize that energy supplies are growing scarcer, energy demands are growing larger, and rising energy use imperils the planet we will leave to future generations.
And that’s why the world is now engaged in a peaceful competition to determine the technologies that will power the 21st century. From China to India, from Japan to Germany, nations everywhere are racing to develop new ways to producing and use energy. The nation that wins this competition will be the nation that leads the global economy.
I am convinced of that. And I want America to be that nation. It’s that simple.”
If a comprehensive climate and energy bill passes with a requirement that 15 to 20 percent of our energy should come from renewables by 2020 or 2030 (as various drafts circulating Congress currently do), we’re going to be buying a lot of turbines. So, it seemed to us at the Workshop that now would be a good time to talk about who we’ll be buying them from.
View the full report on the Investigative Reporting Workshop’s Web site. You’ll also find charts, an interactive map of wind farms currently under construction and audio of administration officials describing how recipients can use their stimulus funds. The Workshop is a non-profit investigative journalism organization, based at the American University’s School of Communication. It’s mission is to provide high-quality investigative journalism reports and make the results available to the public and other news organizations to use.
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Comments
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amazingdrx Posted 8:10 am
31 Oct 2009
But most american capital is invested in international wall street based scams instead of manufacturing. Banking and trading re-regulation might change that, but it hasn't happened. That puts the US and world economy at risk from the same problem. Investors have become acustomed to the large assured (?) returns of ponzi scams like mortgage bundling and credit default swaps.
Actually risking capital in real competitive business ventures will not attract capital, the money acumulated in pension and 401k accounts for instance, until the scamming is closed down.
And even the few honest investment mavens like Buffet who do still practice risk/reward capitalism will most likely put their money in the leaders like Vestas and BYD.
Re-regulate and enforce the regulations or watch the slide continue. We will be lucky if foreign wind, solar, smart grid, and electric car manufacturers create jobs here. An economy that is dependent on imported energy, fertilizer, and manufactured goods has what to buy these imports with? Heavily subsidized GMO chemical grain and corn and a currency that dwindles in value daily.
Exactly how can our economy be stable and secure when any international incident in an oil exporting region or storm in a refining area can stifle growth with no notice at anytime?
What do most of our leaders do about this problem? Fiddle and rake in bribes from the scammers so they can get reelected. Obama highlights this stuff in every speech, we the people are listening, but most of congress, republicans and blue dog democrats (reagan republicans that have infiltrated the democratic party) pay it no mind.
Progressives on the local level need to oust the reagan republicans running our local and state democratic parties. That's where it starts. Expose these traitors, they are not all as obvious as Senators Campbell, Baucus, and Lieberman. Take back the party from chamber of commerce hacks and corporate shills who owe their allegiance to insurance companies and investment "banks".
And as far as under a billion going to foreign wind manufacturers to create jobs and clean energy here? Yes, it's a talking point ready for the beckscrement, good job advancing it.
When renewable energy ought to instead be getting a big chunk of the 100 billion per year in subsidies to fossil fuel, nuclear power, and chemical agriculture, say 70 billion per year, complaining about this measly 800 million going to wind manufacturers is only worthy of wing nuts.
Have you noticed the international subsidy wars over biodiesel for instance? A product that increases GHG many times over petroleum based fuel. How many 10s of billions are being borrowed on US taxpayer's waning credit to keep this scam going?
http://www.biodieselmagazine.com/article.jsp?article_id=3783
Now what I want to know is why aren't factories here in the midwest humming with wind manufacturing activity and why aren't wind machines and HVDC power lines to carry the power being built in the windy great lakes and great plains regions at a pace comparable to war production levels during WW II?
Because the capital from pensions and 401ks are going into big new cycles of wall street scamming? Yep. Call your fund managers and urge them to invest with Buffet. If you have your own retirement investment plan like a 401k, put it into Berkshire Hathaway.
http://en.wikipedia.org/wiki/Berkshire_Hathaway
There ARE still honest patriotic successful american capitalists. Put your money with them.
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Daniel Coffey Posted 9:31 am
31 Oct 2009
Communities which stop renewable energy projects and then expect to have a domestic industry reliant on those projects for income to survive and pay labor and manufacturing costs are completely unrealistic. Delays can stem from both absent transmission and environmental opposition to individual projects. We need to move past these bottleneck.
Note: labor, yes, good, but profits pay for the next round of investment. If those go off-shore, what do we use for the next round of investment? Borrowing?
We don't make nearly enough things in this country, and when companies try, we have developed a culture which supports delay and destroy tactics toward renewable energy projects and transmission. With very few exceptions, the only companies which are currently in the game are from countries where policies support manufacturing and wind and solar power development. Yes, they are in a position to take advantage of our need to build renewable energy projects!
There are 300,000 MW of wind project waiting for approval in the US, and we have a build up of off-shore companies coming to US cities to establish headquarters in anticipation, thereby employing US labor, but in a number of locations across the US, projects are delayed, adverse signals are sent, and investors are threatened with loss or inadequate returns.
I think it is fair to remind the environmental community that anything that slows renewable energy projects extends the profits of coal fired plants and undercuts building American owned competition in the renewable energy space.
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PurpleOzone Posted 10:02 am
31 Oct 2009
Even when venture capitalists backed American startups, they required business plans to do the manufacturing overseas.
I think it vital for the U.S. to get its captial working to grow our country.
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Jon Rynn Posted 8:33 am
01 Nov 2009
We have this same problem, of some jobs in the U.S. but most of the work going abroad, in the transit industry. There are no American subway manufacturers, although there are some assembly plants, and assembly is usually the lowest skilled part of the process. So we need a comprehensive green industrial policy.
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Daniel Coffey Posted 8:49 am
01 Nov 2009
I think we need to strongly support the domestic producers where possible. For too many years the attitude has been "computer chips, potato chip, they're all chips." Now we know better - or do we?
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amazingdrx Posted 1:21 am
02 Nov 2009
With one modification for the legendary Antarctic weather. Sheet metal had to be added to the leading edge of the wooden blades so the wind driven snow wouldn't eat through them over time.
We've got the people who can do the job, what we lack is application of capital to the endeavor.
If GE and Clipper (founded by former GE wind employees) were given the capital to proceed as vigorously as WW II war production did, they could ramp up and still compete with Vestas and even lower cost chinese companies. But you are right, education so people layed off in other industries could adapt to wind machine production is going to be necessary.
We've got a great wind power tech school program here in Wisconsin, right on Lake Michigan.
http://www.gotoltc.com/programs/windEnergy.php
Check this: Vestas partnering with UW Madison Engineering College.
http://www.news.wisc.edu/16491
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Jon Rynn Posted 7:17 pm
02 Nov 2009
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alexismadrigal Posted 5:32 pm
03 Nov 2009
To me, this is a big part of the problem for pitching green tech as a jobs panacea. It's certainly possible that pumping money into our clean energy companies could reverse American manufacturing trends, but it's not going to happen on its own.
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